Shares of CG Power and Industrial Solutions continued to rise, hitting a new high of Rs 327 and rallied 5% on the BSE in Friday’s intraday trade. Shares rose after MSCI added Murugappa Group companies to its India index. These changes will occur at the close of business on February 28, 2023. The S&P BSE Sensex was down 0.19% at 60,690 at 11:09 am.

The market price of CG Power has more than doubled in the past nine months, up 104% from Rs 160.10 on May 10, 2022. The stock has risen nearly 30% over the past three months, with a modest gain of 0.09% for the S&P BSE Sensex.

CG Power is in the business of power conversion equipment, including various medium and low-voltage rotating electrical machines (motors, generators, alternators) for all industrial applications, drives and stampings for all industrial applications. For more than three decades, the company has been a renowned supplier of equipment and solutions for the rolling stock, railway electrification, coach and signalling sectors of Indian Railways.

All of the company’s businesses performed well in the October-December quarter (Q3FY23), with profit before tax (PBT) up 70% YoY. Sales are Rs 1,645 crore, and profit before tax is Rs 274 crore recorded in the quarter were the highest in recent memory.

Ebitda rose 50% YoY to Rs 295 crore. Ebitda’s margin improved by 440 bps to 18%. The company said higher margins were due to better price realisation, higher volumes, favourable product mix, lower input costs and procurement efficiencies.

The company’s order book position is healthy, with an order intake of Rs 2,219 crore in Q3FY23, up 21% YoY. Backlog stood at Rs 4,136 crore as of Q3FY23, 34% higher than Q3FY22.

Meanwhile, the company’s board of directors approved a proposal to invest Rs 126 crore in expanding the transformer manufacturing capacity at Bhopal and Malampur plants.

With an expanding order book, increased manufacturing capacity and steady income from rail contracts, CG Power is poised to streamline its operations. According to analysts, future growth is expected to benefit from proposed capacity expansion plans and improvements in utilisation levels.

According to CG Power, there are various opportunities for growth across all of the company’s businesses. “The industrial business is poised for continued organic growth given the heavy infrastructure investment and the capex cycle’s start. In addition, the electric vehicle (EV) segment is another major opportunity to cater to in the coming years,” the company said in its FY22 annual report.

In terms of the railway business, the Ministry of Railways has announced a road map for the next ten years with enormous investment. It added that the introduction of Vande Bharat trains, the creation of dedicated freight corridors and measures to improve passenger safety are among new business opportunities for the company.